Bitcoin Drops To Less Than $6,000 After Highs Of $20,000. Why?

We will remember 2017 as the year of the cryptocurrencies. In that year, especially in the last quarter, Bitcoin and the other virtual currencies saw exponential growth unlike anything that had ever been seen before.

In the fourth quarter of 2017 Bitcoin grew by almost 500% internationally, the price of one Bitcoin rising from $4000 and crossing $20,000 on some exchanges. In Zimbabwe where Bitcoin trades at a premium, the price crossed the $30,000 mark.

What goes up must come down apparently, and how the mighty have fallen. Cryptocurrencies are full of drama, the exponential growths have been followed by dramatic declines. In January when the international price of bitcoin dropped below $10,000 we wondered whether the bubble had burst.

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Since that time, the downward trend has continued. The rate of decline has been especially heavy in the last 24 hours. Internationally the price reached $5,947 but has risen to $6,172 at the time of writing. If we work with the current $6,172, bitcoin has fallen around 22% in the last 24 hours. [At the time of publishing the price has risen to $7,084, pricing by CoinDesk.]

On Golix, Zimbabwe’s sole cryptocurrency exchange, bitcoin is trading at around $10,000 at the time of writing. It reached a low of $9,500 in the last 24 hours however. This is a far cry from the $30,000 it reached back in December. [Price now $11,400 at this time of publishing]

What is the reason for the decline?

Governments vs cryptocurrencies

The South Korean government has come out to say it has no plans to shut down cryptocurrency trading. This came as welcome news. However, China and India have stepped up efforts to block cryptocurrency trading. In China, they want to block local investor access to cryptocurrency exchanges anywhere in the world, not just in China.

These efforts by these governments have a profound effect because it was the Asian investors who were responsible for bitcoin’s meteoric rise in the first place. By the end of November 2017, Japan, South Korea and Vietnam were responsible for about 80% of all bitcoin trade. Rumours and reports around Asia that bitcoin trading was to be banned is probably the biggest reason bitcoin prices are falling.

Trading with cryptocurrencies

We covered how mobile payment systems giant, Stripe no longer accepts bitcoin and since that time Microsoft, Steam and other e-commerce operators have followed suit. This all came after Visa ended its relationship with WaveCrest, a cryptocurrency credit card provider.

I almost let out a laugh when I heard the North American Bitcoin conference announce they will not be accepting bitcoin any longer.

These institutions made these decisions in response to bitcoin’s price volatility which was mostly caused by the cracking down happening in Asia. However, the decisions to stop accepting bitcoin added to the pressures driving its price down.

Banks

It is no secret that banks, like governments, have always been opposed to cryptocurrencies. They got the excuse they needed to drop bitcoin and send a message to the world – only their system can stand.

Bank of America, JP Morgan, Lloyds Bank, Bank of Scotland and many other banks have banned their customers from purchasing cryptocurrencies on the exchanges.

Again, these moves, work to weaken bitcoin. They may be reactionary but they worsen the problem.

Is it the end for cryptocurrencies?

Looking at the governments working towards banning cryptocurrencies, retailers refusing payment and banks banning cryptocurrency purchases by credit card holders, it will be interesting to see how the cryptocurrencies come out of this one.

In my humble opinion, bitcoin will rise again. This is not the first time there have been wild price fluctuations in its history. The previous fluctuations were actually worse. An example would be when in 2011, the price went from $29 in June to $2 in November, that’s a 93% decrease. These fluctuations come with the cryptocurrency package but in the long run there is an upward trend.

If you are looking for short term gains, you are playing a very dangerous game but if you are looking to cryptocurrencies to preserve value in the long term then you might just strike gold.

Bitcoin and other related currencies are just a small part of the global paradigm shift with how we use the internet. The focus should rather be on CryptoEconomics and the Trust Protocol (Blockchain) as these two nascent technologies will change life on the internet as we know it. Currently we are in the era of thin protocols and fat applications where huge corporations own vast amounts of data and monetize apps that access this data, however we are now moving into an era where we have fat protocols and thin applications where data is owned by those who generate it and protocols are built on how to access it.

what a load of nonsense.
1st, cryptos have been around for about 10 years now, hardly nascent.
2nd, “trust” protocols are really about ssl or ipsec through tunnelling before, blockchain used in cryptos is more of a technology tracking the transactions ledger through complex encryption, hardly a protocol even if that term has been used wrongly.
3rd, data ownership by giants like google or facebook is not going to cease anytime soon due to cryptos, they are hardly competing in the same field and even if by some miracle cryptos become a major player in transactions settlements, people will still use google and its armada of tools when they want to find something on the net and fb when they want to see who had kittens lately. Separate fields.
4th, your comment on monetization shows again your lack of understanding of the concept as described in point 3.
5th, talking about a thin app in relation to cryptos is totally absurd when we see the massive processing and electrical power needed to run this crypto infra.

When all said and done… Block chain will survive but the value was not there from the start…. Techzim was pushing bitcoin because they themselves had them and then tried to increase demand….kind of multilevel marketing… They did not actually use them to trade but rather speculative purposes…. Certainly if you were an early adopter you scored big…. In fact you still making money…in zim though the nation of speculation without actually knowledge investment and hard work…. We will fall for the next quick buck….

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Hahaha Mr Adams, you sound as dubious as these techzim clowns punting bitcoin, now that the techzim marketing machine that has been punting bitcoin is basically dead in the water! And miraculously you suddenly pop i with your crap?!!! Lol

If Zimbos can “burn” the currency it is not real!!!!!!! Bitcoin has gone the route of other Zimbabwean currencies – kuburna! Bitcoin!! Can you trust a currency that has more value in Zimbabwe than anywhere else in the world?